’For growth, banks have to transfer rate cut benefits to customers’

Mumbai - Effective transmission of the benefits of policy rate cuts by banks to their customers is the key to achieving non-inflationary growth, RBI Governor Urjit R. Patel has said.

According to Patel, while the transmission has improved, there was still some space for banks to cut their lending rates, especially on the existing loan portfolios.

By the central government's own formula effective from April 1, 2016, there was scope for administered interest rates to be reduced, he said while speaking at the sixth Monetary Policy Committee (MPC) meeting held here on August 1 and 2, the minutes of which the Reserve Bank of India (RBI) released on August 16.

"Credit growth has also been low, partly because of risk aversion among banks on account of their stressed assets position. Resolution of stressed balance sheets of banks, therefore, will remain important for reviving credit demand and the investment cycle," the RBI chief said.

Tag Cloud

Tags

About Us

The Finapolis helps you grow your money. We offer insightful journalism, credible research and actionable advice suitable to every Indian taxpayer, making us a one stop destination for your personal finance needs.

Disclaimer

The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.